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  1. #1
    Join Date
    Jan 2011
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    3

    Angry Escrow Miscalculated by Title Company

    My question involves personal finance in the State of: Idaho, Bannock County
    Hi everbody, and thanks in advance for any help. I bought my first house through a local bank last Oct.(09), i went through all the paperwork however being only 22 and never done this before i was no doubt naive. all i knew was that my payment could be afforded in my budget. well chase home finance bought the loan about 2 weeks later and sent me the info, all seemed well. about 8 months down the road i got a letter from chase saying that the escrow was mis-calculated by $1100, and wanted me to pay 250 a month more untill it was caught up. times being how they are i could not afford the extra money it would take per month, chase would not help with this at all i made the regular $650 payments as were originally set up and whatever money i had extra now and then, well chase reported everything as late payments and now i have a bad credit score(which was up to a 750 at one point!) and more and more financial problems piling up. so when i looked into it, it all comes down to the fact that the title company no picking up on the tax ememption the formr owner had on the place, so is this a normal mortgage issue or did i indeed get ripped off because i have done everything i was supposed to originally and work very hard to keep things afloat at home. again thanks to anyone who can help and sorry for the long post

  2. #2
    Join Date
    Sep 2005
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    Behind a Desk
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    98,846

    Default Re: Escrow Miscalculated by Title Company

    Explain "the title company no picking up on the tax ememption the formr owner had on the place" - what was the nature of the tax exemption, and why was the title company confused?

  3. #3
    Join Date
    Jan 2011
    Posts
    3

    Default Re: Escrow Miscalculated by Title Company

    the title company estimated what my escrow account should be. they calculated it as being a tax exempt property. which is $900 a year here. the previous owner did not have tax exemption so i ended having $1890 come out of my escrow account for the year putting the account -$1100. Isn't it the responsibility of the title company to search if the property is tax exempt or not, im not an expert but isnt that what they are paid for? thanks for the help by the way, sorry for all the misspelling too...

  4. #4
    Join Date
    Mar 2008
    Posts
    1,995

    Default Re: Escrow Miscalculated by Title Company

    Quote Quoting trent23
    View Post
    the title company estimated what my escrow account should be. they calculated it as being a tax exempt property. which is $900 a year here. the previous owner did not have tax exemption so i ended having $1890 come out of my escrow account for the year putting the account -$1100. Isn't it the responsibility of the title company to search if the property is tax exempt or not, im not an expert but isnt that what they are paid for? thanks for the help by the way, sorry for all the misspelling too...
    NO, the title company's job to is make sure you have clear title, and it is NOT their job to know about tax exemptions.

    The amount accrued may originally have been supplied to the bank by the title company, but it is the "service company's" job to figure out the correct accrual. A few years back, I recall banks are required under Federal Law to to provide an annual analysis of the escrow, and consequently ONLY then LEGALLY accrue the amount necessary. So if a year went by, if $1,890 was accrued, and only $900 is required, then the over-accruing would be evident by then.

    This should have been picked up in the annual escrow analysis by the bank, or should be very soon.

    This happened to me once. A bank did over-accrue, I was very busy and the time, had no time to go argue with them, so I treated the over-accruing as "my savings", which they were obliged to pay interest, and eventually repay me. When the escrow analysis was finally made, right on schedule, they sent me a check.

  5. #5
    Join Date
    Sep 2010
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    19,843

    Default Re: Escrow Miscalculated by Title Company

    Actually in many places the TITLE COMPANY is actually the escrowing entity that handles the closing (this practice varies from place to place, some times it's a title office who also offers title insurance, some places it's traditional for a lawyer to handle closings, some places the banks do it).

    But, the closing escrow is only in error if the money in the HUD-1 isn't distributed as documented. Setting up the ESCROW IMPOUNDS for payment of tax payments and insurance and the like isn't usually the responsibility of the closing, but it is set by what the BANK wants to do. The initial funding of the impound is collected at closing as to THE BANK'S INSTRUCTIONS.

    However, stuff happens. You're liable for the taxes, and nobody else is going to pay them. If there had been some penalty for failure to remit them on time when the escrow account was supposed to pay them, you could get relief for the penalty, but that's it.

    Frankly, I detest escrow impounds. I try to find banks that do not require it though I submitted to it last time because I got a better rate at a bank who required one. Fortunately, they sold my loan twice before the first payment was due and the bank who it ended up with (Wells Fargo) was happy to waive it for me and let me handle my own taxes and insurance.

  6. #6
    Join Date
    Jan 2011
    Posts
    3

    Default Re: Escrow Miscalculated by Title Company

    Ok I understand. Thanks for the help. Being a first time home buyer I was unaware how to find out if the house has an exemption or not since I never dealt with the seller face to face...I suppose next time I buy a house I will have find all of that out on my own. Wouldn't it be nice if the bank would set an account aside to catch escrow up.

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